Wachovia net sinks on losses and write downs

By Jonathan Stempel

NEW YORK (Reuters) - Wachovia WB.N, the fourth-largest U.S. bank, said on Tuesday quarterly profit fell a larger-than-expected 98 percent, as the bank suffered more than $3 billion (1.5 billion pounds) of write-downs and credit losses tied to mortgage and capital markets turmoil.

Fourth-quarter net income fell to $51 million, or 3 cents per share, from $2.3 billion, or $1.20, a year earlier.

Excluding merger costs, profit was $160 million, or 8 cents per share. On that basis, analysts on average expected profit of 32 cents per share, according to Reuters Estimates.

"Our fourth-quarter results were poor," Chief Executive Ken Thompson said on a conference call.

But he said that "with the exception of structured products and with the exception of credit issues going on in the mortgage market, every part of our company other than that is having excellent results."

Results nonetheless represented a setback for Thompson, who has spent years building a big investment banking business on structured products -- a complex security that many investors are now shunning. He has also since 2006 fended off criticism for spending $24.2 billion on mortgage lender Golden West Financial Corp, just before the housing market soured.

Wachovia shares fell as much as 7.8 percent to a six-year low, but rebounded after Thompson said Wachovia had no plans or need to cut its 64 cents per share dividend. In afternoon trading, the shares were up 99 cents at $31.79.

Results included a $1.7 billion loss from structured products, including collateralized debt obligations. This included $1 billion tied to subprime mortgages, $600 million for commercial mortgages and $123 million for other consumer mortgages.